You know that saying that there’s “lies, damned lies, and statistics”? Well guess what, the financial industry is as guilty as anyone! I always see “S&P 500 stats” thrown around and so often they can be ANY ONE of these four lines shown, often without explanation or misleading conclusions.

Let’s break down each of the four lines:

• $2,762,926: Total nominal return. In this context “Total” means dividends reinvested. If you invested $10,000 in the S&P 500 50 years ago, over that 50 years those 500(ish) stocks would pay dividends to you. That’s real cash. Since we generally don’t flush cash down the toilet, it’s reasonable to assume you would use those dividends to buy more of the S&P 500. That’s called dividend reinvestment. “Total” return is what you get when you account for the increase in share price AND reinvesting dividends. “Nominal” means that is the actual NUMBER of dollars you would have. So if you invested $10,000 in the S&P 500 and reinvested dividends, today you’d have about $2.7M! (This is ignoring management fees and taxes, but these days you can get those to zero using an index fund in a Roth IRA)
• $732,627: Nominal share price only. SO OFTEN when I see investment returns posted, they’re ONLY showing the share price and ignoring dividends. This is how much money you would have if you flushed those dividends down the toilet for 50 years.
• $465,965: Total real return. Now let’s talk inflation. $10,000 was a lot of money 50 years ago. If you want to measure the total (dividends reinvested) return while accounting for inflation, this is it. So this is the number you can use to think of everything in 2025 dollars. i.e. Going forward if you invested $10K for 50 years and got the same returns you would NOMINALLY have $2.7M in your account, but it would only buy as much stuff as $466K today.
• $123,557: Real share price only. This isn’t really of any value to anyone. The inflation adjusted share price, while flushing dividends. This is a number used when someone is trying to tell a lie.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy

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By: Gabriela Gonzalez
Title: S&P 500 Stats: What do they really mean?
Sourced From: personalfinanceclub.com/sp-500-stats-what-do-they-really-mean/
Published Date: Tue, 22 Jul 2025 21:07:22 +0000

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